American Legislative Exchange Council

The American Legislative Exchange Council (ALEC) describes itself as the largest “membership association of state legislators,” but over 98% of its revenue comes from sources other than legislative dues, primarily from corporations and corporate foundations.[1] After the 2010 congressional midterm elections, ALEC boasted that “among those who won their elections, three of the four former state legislators newly-elected to the U.S. Senate are ALEC Alumni and 27 of the 42 former state legislators newly-elected to the U.S. House are ALEC Alumni.” (A full list of the Congressional freshmen who are ALEC alums can be found here.) [2]

About ALEC

ALEC is a corporate bill mill. It is not just a lobby or a front group; it is much more powerful than that. Through ALEC, corporations hand state legislators their wishlists to benefit their bottom line. Corporations fund almost all of ALEC's operations. They pay for a seat on ALEC task forces where corporate lobbyists and special interest reps vote with elected officials to approve “model” bills. Learn more at the Center for Media and Democracy's ALECexposed.org, and check out breaking news on our PRWatch.org site.

Originally promised "no attempt to influence legislation"

Surprisingly, the nascent group's statement of purpose included this assurance: "No substantial part of the activities of the corporation shall be the carrying on of propaganda, or otherwise attempting to influence legislation."[5]

Changes in the 1980s

The National Journal recognized the rising prominence of ALEC in the New Right movement of the mid-1980s in a major feature article. The article noted its connections to the Heritage Foundation, including a shared Capitol Hill building. It also described the organization's political wing, the now defunct ALEC-PAC, which in 1984 targeted 84 legislative seats in states. Notably, the state backed conservative Democrats in some races, getting involved in states with either thin conservative or liberal majorities including Ohio, New Mexico, Michigan, Pennsylvania, Delaware, Washington and Wisconsin.

Richard A. Viguerie, a leading new right conservative[6], spoke of ALEC in the context of the growing movement, saying that "leading conservatives [had] 'fairly recently' determined that the state-local level 'is the missing piece of the puzzle for us.'

Then executive director of ALEC Kathleen Teague Rothschild, reflecting the new thinking of conservative strategists, noted that "In Congress, you've got only one legislative body and they will either pass or kill your bill. In the states, if you're trying to get banking deregulation passed and you've lost in Kansas, Nebraska and Texas, it's not a total failure. You may well win in Arizona, California and New York that year. You've got 50 shots."

Teague also noted that a nationwide network present in every state could be effective in supporting amendments to the United States Constitution. "State legislatures must ratify constitutional amendments. If the cumulative efforts of the conservative PACs succeed in pressuring Congress to pass a school prayer or a balanced budget amendment", said Teague, "they'll have to get 38 states to pass those things. You have to have an active support network in the states when ratification time comes."

The chairman of ALEC's business policy board at the time was Donald Rumsfeld. Rumsfeld said that his interests in economics and government regulation, rather than social issues, led him to become involved with the organization.

Later years

Support for ALEC

Corporate membership - price range and options

Corporations pay between $7,000 and $25,000 a year for membership in ALEC. Corporate membership in one of the nine ALEC task forces (or subcommittees) has separate and additional fees:[7]

ALEC corporations can donate additional funds beyond these amounts. According to ALEC’s by-laws, corporations also work with ALEC legislators who are its “state chairmen” to raise money from other corporations for “scholarships” for legislators to attend ALEC events.

According to Dennis Bartlett, an ALEC task force head who is also the executive director of the American Bail Coalition, “the organization is supported by money from the corporate sector, and, by paying to be members, corporations are allowed the opportunity to sit down at the table and discuss the issues that they have an interest in.” [8]

Other support options

Corporations can sponsor annual ALEC conferences, offer grants for specific projects, or just give ALEC money. For example, in 2005 ExxonMobil spent $90,000 sponsoring the ALEC 2005 annual conference, gave $80,000 towards the “Energy Sustainability Project,” and an additional $71,500 for “general operating support.”[9] ExxonMobil or its foundation has given over $1.4 million to ALEC in the past decade or so, according to the Form 990s filed by the ExxonMobil Foundation and other corporate documents, compiled by the Greenpeace project "Exxon Secrets."[10]

Trade Associations and Foundations

Corporate trade groups and other non-profit groups also make donations to ALEC of undisclosed sums. Examples include the NRA, the American Bail Association, and the American Petroleum Institute. There are also others listed here.

Additionally, ALEC has received millions from right-wing foundations created by corporate CEOs or their heirs over the years and which advance a corporate agenda through donations. Here are some of the foundations that are or have been donors to ALEC:

Membership

“Public Sector Members”

Elected legislators can join ALEC by paying a token fee of $50 a year. [20]

While the membership fee for legislators is nominal, some legislators have used taxpayer dollars to pay it. For example, in Wisconsin, open records requests revealed that 12 senators, all Republicans, had their ALEC membership dues paid by taxpayer funds.[21]

ALEC does not release the identities of its over legislative members. Some legislators tout their role in ALEC while others take a lower profile with ALEC. The Daily Kos blogger project, called Exposing ALEC, has been compiling a ALEC legislative member list, past and present, here.

ALEC Task Forces

ALEC model legislation is introduced in, and initially approved by, one of nine “task forces,” which are chaired by both elected officials and “private sector” corporate members. [22] ALEC corportions are often represented by their lobbyists on ALEC’s board or task forces, and their representatives discuss and vote on legislation with legislators.[23] For example, according to the American Association for Justice, in the area of “tort reform” legislation, “the nuts and bolts of . . . crafting legislation is done by large corporate defense firm Shook, Hardy & Bacon,” which has defended tobacco companies and other corporations against lawsuits.[24] The law firm’s partner, Victor Schwartz is a long-time co-chair of ALEC’s "civil justice" task force.

The ALEC corporate and politician boards of directors meet jointly annually at a meeting that constitutes the final say over the bills and other matters for the organization. (ALEC says corporations do not vote at that meeting.[27])

Secrecy and Lobbying

Under ALEC’s published by-laws, legislators who are ALEC “state chairmen” have a “duty” to get the model bills introduced in their state legislatures.[28] However, when ALEC legislation is introduced in state houses, it is under the name of the sponsoring legislator rather than ALEC itself, with no mention that the bill was pre-voted on by corporations through ALEC or even connecting the bill to ALEC. The task forces obscure how “corporations [get] access and influence for which they'd otherwise be publicly scrutinized." [29]

NPR reported that "much about ALEC is private. It does not disclose how it spends it money or who gives it to them. ALEC rarely grants interviews. [Senior Director of Policy Michael] Bowman won't even say which legislators are members. Is it lobbying when private corporations pay money to sit in a room with state lawmakers to draft legislation that they then introduce back home? Bowman, a former lobbyist, says, "No, because we're not advocating any positions. We don't tell members to take these bills. We just expose best practices. All we're really doing is developing policies that are in model bill form." [30]

The American Prospect quoted "someone familiar with the organization" of ALEC as saying, "The totality of what they do is lobby. It's a self-sustaining con game." ALEC, however, denied the charge. ALEC’s then spokesman Bob Adams (who now runs and is the only employee of the front group “League of American Voters” CHECK) insisted, "We don't lobby... We don't introduce legislation at the state level. We just don't do that."[31]

In 2009, however, reporters discovered that Shook, Hardy and Bacon attorneys Mark Behrens and Corey Schaecher traveled to North Dakota to speak with legislators and their staff about ALEC’s asbestos bill, called the “Innocent Successor Liability Act,” without registering as lobbyists. At least three days after Schaecher was known to have been lobbying legislators, the ALEC asbestos liability bill was introduce on January 15 as HB 1430. The “North Decoder” blog revealed their lobbying activities on January 23, 2009; within hours, ALEC submitted letters of authorization permitting Behrens and Schaecher to lobby on their behalf, the same day the corporation most likely to benefit the legislation, Crown, Cork, and Seal, also registered the two as lobbyists. On January 27, Behrens testified before the North Dakota House Judiciary Committee in support of the legislation, and the following day, ALEC threw a party for legislators so they could “learn more about America’s premier legislative organization.” [32] According to the National Institute on Money in State Politics, this is the only instance in which ALEC has ever registered to lobby in any state. [33] In its 2009 IRS Form 990, in response to the question “Did the organization participate in lobbying activities” (page 3 question 4), ALEC replied “no.” [34]

Conferences

ALEC holds three primary meetings each year: the “Spring Task Force Summit” meeting of ALEC Task Force members, the four-day “Annual Meeting” in the summer for all ALEC members, and the three-day “States and Nation Policy Summit” that “introduces the ALEC agenda to newly elected and freshman state legislators.” [35][36] In the ALEC brochure advertising corporate membership, it describes these three gatherings as “meetings and networking opportunities.”

Defenders of Wildlife (DOW) and the Natural Resources Defense Council (NRDC) pointed out in their 2002 report on ALEC that for legislators, one of the chief benefits of ALEC membership is the opportunity to take at least one subsidized or all-expenses-paid trip that looks a lot like a vacation.[37]

The conferences are held in cities across the country, often at high-end hotels. ALEC’s 2010 annual meeting, for example, was held in San Diego at the Manchester Grand Hyatt resort; the 2011 summer meeting is at a post New Orleans Marriott in the French Quarter. Legislators are encouraged to bring their spouses and families, and can pay a $250 fee for their six-month old child or teen to participate in babysitting program called “Kids Congress.” ALEC’s 2009 IRS Form 990 indicates over $250,000 was spent on childcare. [38]

Unlike for the United States Congress, most state-level legislators in the nation are part-time, and many state legislatures meet for only part of the year. The average annual salary for state legislators is $45, 880, ranging from a low of $19,260 (in New Hampshire) to a high of $78,500 (in New York).[39]

In Wisconsin, where the Center for Media and Democracy is located, the total compensation for state legislators is $49,943.[40] According to the U.S. Bureau of Labor Statistics, base compensation is $19,860 as of May, 2010. [41] Like many states, the Wisconsin Senate and Assembly are not in session year-round, and so many legislators supplement their state salary with other part-time earnings.[42]

For a Wisconsin legislator, the costs of attending an ALEC conference at a resort could be more than five percent of that legislator's state salary. Those expenses, though, are sometimes paid for with taxpayer dollars, or reimbursed by ALEC's corporate-funded coffers.

An examination of financial disclosure forms filed in 1999 and 2000, for example, showed that taxpayers footed the bill for at least $3 million each year in connection with legislators’ travel to ALEC-sponsored meetings.[43] According to NRDC, “that means each year a significant amount of taxpayer money is helping ALEC do its business, which is predominantly aimed at advancing corporate special interests.[44]

An untold number of state lawmakers accept “scholarships” from the corporate-funded ALEC, or in some cases, directly from corporate lobbyists.[45] Without that “scholarship,” attending an ALEC conference could be a vacation the legislator might not otherwise be able to afford. Some states, especially in the South and West, have written explicit exceptions into state ethics laws to permit legislators to accept “scholarships” from ALEC. NPR reported that looking at Arizona's legislators who attended the ALEC conference, no one declared receiving gifts. "Sen. Pearce and a dozen others wrote that they received a gift of $500 or more from ALEC. A review of the two dozen states now considering Arizona's immigration law shows many of those pushing similar legislation across the country are ALEC members. In fact, five of those legislators were in the hotel conference room with the Corrections Corporation of America the day the [immigration] model bill was written. The prison company didn't have to file a lobbying report or disclose any gifts to legislators. They don't even have to tell anyone they were there. All they have to do is pay their ALEC dues and show up."[46] ALEC’s website claims that in each legislative cycle, its members introduce around 1000 pieces of legislation based on ALEC bills, with roughly 18% enacted into law.

Finances

Potential IRS Audit

As of the end of 2012, ALEC appeared to be anticipating an IRS audit, after multiple complaints challenging the "corporate bill mill's" charitable status, based on documents recently obtained by Bloomberg News.[47]

According to internal ALEC documents, the organization has discussed forming a nonprofit organized under Section 501(c)(4) of the tax code, apparently in anticipation of the IRS revoking ALEC's current "charitable" status. Charities (which are organized under Section 501(c)(3) of the tax code) as well as nonprofits are tax exempt, but ALEC's charitable status had allowed its corporate members to write-off their ALEC membership dues and costs as tax-deductible charitable contributions. ALEC Executive Director Ron Scheberle discussed forming a 501(c)(4) called "ALEC NOW" in an August memo, claiming that if a 501(c)(4) were "operating fully prior to an IRS audit," the agency might allow the newly-formed (c)(4) to continue operating and take over activities impermissible for a (c)(3) charity.[47]

Stephanie Mencimer Idaho Bans Federal Health Insurance Mandate, Mother Jones, March 18, 2010. Article discusses a model bill that ALEC wrote that ended up being a resolution passed by the Idaho legislature opposing any and all health care reform, including taking any and all measures to oppose it.

Nicholas Kusnetz. The Assault on Healthcare Reform, The Nation. Oct. 6, 2010. An article describing the role ALEC played in becoming a message-multiplying-force, as well as a financial influencer, in dismantling health care reform in the U.S.

References

↑Lisa Graves (2011-07-13). A CMD Special Report on ALEC's Funding and Spending -. Center for Media and Democracy. Retrieved on 2011-08-10. “More than 98% of ALEC's cash is from sources other than legislative dues, such as corporations, trade associations, and corporate foundations. (links to ALEC 2009 IRS Form 990)”

↑See, e.g., Email correspondence between Greg Chesmore of Celgene Corporation and Wisconsin State Representative (and ALEC member) Leah Vukmir, September 24, 2009, available at http://www.scribd.com/doc/51654823/Writing-Alec-Legislation . (Celgene Corporation’s Chesmore writes “I met with Christie Herrera at the ALEC offices a few weeks ago to discuss a Model Resolution supporting umbilical cord blood and placenta-cord donation and banking and encouraging private entities to continue expanding access and research using the stem cells derived from these two sources . . . Celgene is actively engaged in research utilizing stem cells derived from cord blood and placenta-cord . . . I’d like to run a draft I’ve been working on past you and talk a little more about the resolution and the strategy behind it.”)